Kirill Tatarinov: Convergence 2008 Copenhagen – The Dynamic Business

KIRILL TATARINOV: Good morning everybody. Welcome to Convergence 2008, welcome to Copenhagen. It’s incredible that it’s been a year since the last time we got together as a group here in Copenhagen in 2007. And certainly what a year that has been. The world feels like a very different place right now. We’re clearly experiencing some very tough economic conditions, and it feels like it is a completely different place.

One short personal story, as I was packing to come here to Copenhagen to meet with some of our best partners and customers ahead of Convergence, also our employees here that led the process, I was packing my suitcase and my wife just got off taking another dose of bad news from the Internet. I guess she read something about the European recession. And she told me, what a terrible time for you to have a conference with your partners, and your customers. What a terrible time for you to even go there, and I don’t even think they will come and listen to you. But look at this, 4,000 people come together, 4,000 people here together to see and understand what we can do to survive and thrive in this current economy.

Now, being married for 20 years, I never disagree with my wife, and I’m sure you people in this room understand that strategy quite well. But this was the case where I disagreed with her completely, because I believe it’s in times like this when it’s more important than ever for us to get together as a group. It’s in a time like this that it’s more important than ever for us to understand what we can do to work together. It’s in a time like this when it’s of paramount importance for Microsoft, as a responsible vendor, to come to you and state and restate our commitment to your success, our commitment to your future, our commitment to your ability to survive and thrive in this current economy.

So for Convergence 2008 there are three concrete objectives that I want to have accomplished in this conference. Here’s how it goes. No. 1, I want to make sure that our existing customers – and this is largely an event for all existing customers – I want to make sure that our existing customers walk away from this event feeling convinced that they made the right choice with Dynamics, that Dynamics is the solution, Dynamics is the platform, and Dynamics is the technology to help you endure and prevail in this economic climate, and help you get away from this economic cycle stronger than ever.

It’s also an opportunity for us to give you ammunition to go back and prove to your shareholders, and to your board that you made the right bet in Dynamics. We understand that you made the commitment to your company, and it’s our job to demonstrate to you that this was the right commitment.

We also have some of customers here in the room, and I want to make sure that you walk away convinced that Dynamics is a technology that can help you survive this climate, and investing in Dynamics today is something that you should do to both increase your productivity, reduce costs, and prepare for the future.

And last but not least, this is the opportunity for Microsoft and our partners, and there are many partners here in the room, to demonstrate to our mutual customers on how we work together, and how we make this triangle of success with our customer on the top, and Microsoft and our partners working together helping you survive, helping you endure and prevail, helping you persevere.

There are many things that organizations have to do to prevail in those conditions. There are many things that businesses do to ensure sustained growth. Obviously today many people talk about cost reduction, but just reducing costs is not going to cut it. There are many other things that people do, and there are many other opportunities that exist in the current economic climate.

An interesting statistic that I heard another day, more than 50 percent of successful Dow Jones companies actually got started in times of recession. They took clear opportunity of that economic climate by partnering, by acquiring, by expanding, by very creatively managing risk, by making sure that they invest in technology and innovation, and get ready for the economic cycle to exit recession, and to enter the next phase of growth. And that’s clearly something that we all need to work together to accomplish.

There are many successful companies who have done it, and there are many examples we can look at across the world, across different industries, but one example I want to highlight is actually a local company which is quite near and dear to my heart from my childhood. This is a Danish company called Lego. They’ve been in business for over 75 years, and they clearly went through many cycles, upturns and downturns, and clearly they learned how to survive, how to strive, and how to persevere.

They entered the business in 1932 by building wooden furniture. They then went into wooden toys. And then finally in 1963 they came up with this most incredible toy that still exists, and still makes many children around our planet incredibly happy, the famous Lego blocks. And they continue to stay the leader, and they continue to drive over $8 billion of Danish kroners in revenue every year with that product.

How do they do it? How can they survive? Well, they stay very connected with the market. In fact, their designers are also market researchers who analyze every turn, and every new trend in the marketplace and in the industry. And that enables them to stay ahead. And that’s another reason, another very important reason for us to get together during this time, stay very connected, understand the trends that we all observe, understand and learn from each other, and share on what we can do together to prevail, to endure, and to persevere.

The winds of change are blowing. The winds of change are blowing, and different people react differently to change. There are some who try to hide and build shelters, there are some who create windmills. The reality is, you need to do the same, you need to do both of those things. Successful businesses need to both manage cost and also invest in new opportunities. The change is multi-dimensional, the change comes from many different angles. The economy in geopolitical environments is obviously heating up right now, and this is something that we’re experiencing across the world. Technology, changes in technology and technology advancement, whether it’s innovation and introduction of new products, some are able to adapt to those changes, some are able to embrace that new technology and start using it to their advantage. Others are left behind.

There are completely new ways people do business today. Only a few years ago it was unheard of to see mid-market organizations involved in broad global commerce. Today, I was talking to many of the people here in the room, you can hardly find mid-size organizations – or any organization for that matter – that is not involved in business commerce, and systems and business processes must adapt to this change. And, of course, the work force is changing, we now have completely new people entering the workforce, people who in many cases started to use computers before they learned how to write. I can only judge by my own children who are entering the workforce today, and my son works in New York part-time in one of the financial institutions, and he was home for a summer, and I was talking with him about what he does and what systems he runs, and it turns out he uses Dynamics. I had no idea that he used Dynamics, and I asked him, so what did you do to start using it, did you have to open the manual? And he said, no, I just opened it up and I started posting transactions. And that truly made me proud, that truly made me proud that this technology addresses the needs of the new generation that is entering the workforce, the new generation that expects things that just work, expects things that they don’t have to open the manual to understand how they work, and how they can interact with the system.

The role of software is changing. The role of software is changing dramatically. One would think that the software should be the driver for change, and the software should be empowering people to implement change. But, in fact, what we’re seeing in the world, what we’re seeing in business is something completely different. We’re continuing to see that legacy business applications are constraining people from changing, preventing them from moving forward, preventing them from adapting business applications to the change in the environment, and to the changes in their organization. And that is precisely what we want to change, and that is precisely what we can change by working together. So embracing change, adapting to change, using change to your advantage is something that truly differentiates successful businesses from those who are left behind.

So what do businesses want? We spend a lot of time talking to our customers. We spend a lot of time talking to our partners. We spend a lot of time analyzing what do businesses want. And obviously we want to drive business forward. We want to be successful. But the No. 1 thing, we must deliver to our shareholders, whether we’re public companies, or privately owned, shareholder returns is the number one thing that makes business peak. And in order for us to do it, there are many things that we need to do in times good or bad. We must endure and grow. We must be efficient, and we need to make sure that that efficiency can be reinvested in agility, and help us grow and drive forward. We must stay competitive. Winning in competitive markets is something that, yet again, truly differentiates successful businesses and those who are not. We want to empower our people, because people drive business success. And we want to aspire to deliver to the needs of the new economic realities, we want to aspire to growth, and we want to aspire to succeed.

And we call the businesses in this space The Dynamic Business. And The Dynamic Business, and the nature of The Dynamic Business is what I want to talk to you today. And I want to talk to you about the characteristics of dynamic business, and I want to talk to you about Microsoft’s commitment, and Microsoft’s promises to help you turn your businesses into The Dynamic Businesses.

Let’s talk about what we mean by dynamic business. It’s really about three things. It’s about people, process, and ecosystems, about people, process, and ecosystems working together. And it’s our promise, and our commitment to make sure that you can have a more productive workforce in your organization, that you can implement adaptable and flexible business processes. And it’s our commitment and our promise to make sure that you can connect with broad ecosystems of partners, customers, and suppliers. This is a very commitment from Microsoft, this is effectively what we are going to do for our business customers. Take it as a promise, take it as a commitment, take it as a strategy, as the vision for Microsoft Business Solutions that we will continue to drive and we’ll continue to evolve our products, and we’ll continue to innovate.

Business starts with people, people are clearly the most precious asset in an organization. In times good or bad people will drive results, people will drive success, people that have the knowledge and intellectual memory of any organization. And it’s very important to keep people empowered at any time, but in bad times even more than in good ones. Microsoft recently conducted surveys, surveys of our small and medium-sized customers, and there were several questions on the survey. One question was about innovation, and the question went like this, what technology would you invest in in bad times like today? What would be the innovation that you would still look at embracing, and the investment that you would still look at making in times like today? And the answer was very simple, they didn’t even name any particular technology, they just said, anything that can help me make my people more productive. Productivity is what drives phenomenal gains in the business.

There is some simple math you can run here. Say, for example, an organization that’s figured out the way to improve productivity of their people by 20 percent, improved productivity of their sales force by 20 percent so they can sell more, and improved productivity of their back office and operations by 20 percent, reducing costs there. Well, 20 plus 20 in that particular situation is actually improvement to the bottom line of more than 50 percent. That’s why productivity is such an important driver. That’s how it really impacts the bottom line. That’s why companies are so much focused on making their people more productive. And that’s why people, and making people more productive is such an essential core element of The Dynamic Business.

When we think about people productivity, and when we think about what we, as Microsoft, as the vendor, can deliver to help you make your people productive, the No. 1 thing that we think about is user experience, giving an experience to your people that can dramatically improve their productivity through technology. There’s a little over a billion people around the world that use PCs every day. And there’s over 60 percent of those people who actually use office in their day-to-day life. Microsoft Office is a ubiquitous tool for information workers, and for business decision makers.

By delivering business applications that look and feel just like Office, that fit with the overall Office paradigm, that looks no different from Outlook, Word, Excel – this is the No. 1 driver that helps those new workforces, that helps the users in the organizations to very quickly and very rapidly embrace business application without ever having to open a manual.

But people still need to be trained on business processes, on the ways businesses run, and different mechanisms, and different process. In that domain we’ll continue to invest in online training through customer source technology that is now used by many of our customers worldwide. We effectively provide 24/7 online training that can help your people get up to speed on that technology and go beyond just using the familiar interface. One customer who successfully used that online learning today carries over 70 percent of its training online. And that allows them to reduce the overall training cost by over 30 percent a year, which is very concrete, very actual savings.

Role-tailored user experience is something that we do to go even beyond delivering familiar interface. We think it is one of the core differentiators for Microsoft is the world of business applications. This is also the area where we drove massive investment in the course of the last five years – researching what do people in organizations do, and how do they do it, and make sure that we deliver software that maps every step that they have to perform in their daily life, making sure that we simplify every task that they have to perform, making sure that we deliver end to end scenarios that completes their work in one screen, and gives them everything they need in their daily life in one simple, easy to use, and familiar interface.

But it doesn’t stop with role-tailored experience, which is of course very important, the core mission here, the true vision is to really deliver software that people would love, deliver software that is desired by people, deliver software that people want to use. Only by doing that can we achieve very dramatic increased usage of business applications in many organizations. Today it is still not efficient. Today, when we look across even those companies that acquired business applications, we see middle teens of percentage points of people in organizations who are capable of accepting that application, and it’s our job to continue to drive research, to continue to innovate to make sure that 100 percent of people ultimately have the ability to use business applications.

So I want to show you a short video of the research methodology that we’re working on together with the IT university here in Copenhagen. This methodology is effectively what helps us build the solutions that will be highly desirable by people, the methodology that will address the psychological need of people in business, the methodology that will help us create software that people love. Let’s roll the video, please.

(Video segment.)

A picture is clearly worth a thousand words, and we’ll continue our quest to make sure that we deliver the software that helps your people be more productive. But also today, we have many examples of how customers have successfully deployed Dynamics and successfully improved productivity of their people. I want to talk about just one of those customers, it’s an Excellence Award Winner on innovation her in Scandinavia, a company called Choice Hotels Scandinavia. They’re a franchisee of Choice Hotels International. They grew rapidly through acquisitions and rapid expansions, and they ended up having 10 different finance systems, and 15 different front desk systems. They were not integrated, they were hard to use and they were truly constrained in their ability to grow.

Yhey ended up deploying NAV across all of their hotels. And they also implemented hotel management systems built by one of our great partners in Norway called Cenium, a Gold Certified Microsoft Partner that embraces a broad range of Microsoft technology, including Dynamics NAV. They use NAV for virtually all functions across the organization, bar, cafe, conference room, reservation systems, back office, finance management, all of the functions covered by NAV, and everybody in the organization has access in the system, from somebody who assists you at the check in to people who manage your future projections, and people who manage back office – everybody has access, and everybody has a role to play in managing Choice Hotel, and helping the organization grow.

As they deployed the system they saw some very concrete improvements. They were able to grow their revenue by 38 percent, and that compares to the industry average of 8 percent. They were able to drive dramatic reduction in costs in their IT organizations, they reduced hardware costs by having a simple installation footprint. Over 30 percent all up reductions in their IT costs, which is much better than the industry average. When we look at the hotel industry we find that typically hotels spend 1-1/2 percent of their top line on their IT needs. In the case of Choice Hotel they were able to reduce it to under 1 percent.

They dramatically saved on training costs by being able to drive familiar interfaces, people don’t have to spend hours and hours to get trained on. And they also embraced the environmental sustainability initiative, where they very creatively used the Dynamics NAV product to manage heating of their rooms, so they don’t have to heat the room. It does get quite cold in Scandinavia as many of you know, so they don’t have to heat those rooms if they’re not occupied, and they can start heating the room based on the schedule of the arrival of people, for people who are staying there.

The company continues to grow through innovation, they continue to look at the breadth of the Dynamics portfolio. They’re currently looking at embracing Dynamics CRM to do an even better job in managing their potential and future customers and partners. And they’re also investigating Dynamics NAV 2009 that would enable them to help take the user interface to the next level.

Speaking of NAV 2009, the big announcement today – the biggest highlight of Convergence 2008 – is that Microsoft Dynamics NAV 2009 is going live. The product RTMed on Friday, on time I’m very proud of what the NAV team was able to accomplish, giving you this fantastic release of a product, and I know there are many NAV customers here and partners here in the room who will be incredibly happy to get this new release of the product.

There are a few very exciting things that NAV 2009 brings to the market. These things squarely address the needs of helping people be more productive, and address the cost issues that exist today in the current economy. Take role-tailored user experience. With NAV 2009 we are shipping 21 pre-configured roles that address the needs of specific personas in organizations. Of course, these roles can be customized for specific needs of our users, of course those roles can be expanded by our partners. But, that role-tailored experience is now available in the Dynamics NAV product, and as a result available to the entire portfolio of Dynamics Products.

Then there is business intelligence. Through deep integration with Microsoft SQL Server 2008, we can now surface very deep business intelligence, and analytics, right in context of the actual role that people play in their organizations, and make sure that everybody in the organization, not just the high priest of IT, gets access to sophisticated business analytics right in front of them when they need it, the way they want it.

And last but not least, embracing Web services is another very important characteristic of NAV 2009. And through Web services, and through interoperability this technology enables IT professionals in the organization to dramatically decrease costs of providing systems, by providing the pre-integrated interfaces and tying in NAV 2009 with the rest of your environment.

So we can talk for hours about features in NAV 2009, but I thought it would be better off to show you the actual real-time scenario on how NAV addresses the needs of a very specific customer. So let me invite Jesper and Michael in stage, and let us show you how the product actually works, and how it addresses those scenarios.

Gentlemen?

NAV DEMOER MICHAEL: Hello, Kirill.

KIRILL TATARINOV: Hi there.

NAV DEMOER JESPER: Hi, Kirill.

Well, Microsoft Dynamics NAV 2009 is really about personal productivity with the new role-tailored user experience. And to really showcase that we have created a scenario with three roles, there’s a role for Michael, and there’s a role for me and, Kirill, I was wondering if you would take the role that ties everything together.

KIRILL TATARINOV: I would be happy to. It’s part of my job to tie everything together.

NAV DEMOER JESPER: Excellent.

KIRILL TATARINOV: What roles are we playing here?

NAV DEMOER JESPER: Well, I will be the purchasing agent, and you will be the shipping and receiving manager.

KIRILL TATARINOV: It sounds like I just got a promotion.

NAV DEMOER JESPER: I think so.

Well, this is my role center, and I’m

KIRILL TATARINOV: What is he doing over there?

NAV DEMOER JESPER: He’s reading his paper, we’ll get back to that later.

Well, I’m all eager and excited, because I’m going to use my Microsoft Dynamics NAV 2009. And I’m saying mine, because it’s tailored to my role, and to me as a person. So this is the role center I see when I start off Microsoft Dynamics NAV. I can see my activities, and that will help me prioritize the tasks that I have ahead. I can also see the impact of the work that I’m doing directly on my role center.

KIRILL TATARINOV: So this is BI in context?

NAV DEMOER JESPER: This is BI in context, of course. Also in order to get an overview of the day ahead we have put in Microsoft’s Outlook as a part of the role center. And right there we can see that right now I should actually do follow-up order arrival. In order to do that I need to run one of my frequent reports, and since it’s a frequent report it’s available also directly on the role center. So this is my report, and the red bars are not something that I’m proud of, but these show us that we have orders coming in late. And directly in the report I can actually go in and click sort, and now I can see that we have three orders coming in late.

I can actually do more in the report I can expand this one and see that these are three Xbox games coming in late, and that will hurt my holiday sales, I think. So I need to take action on this.

KIRILL TATARINOV: All right, let’s get to work.

NAV DEMOER JESPER: So directly from the report I can click here and open up the task page for this particular purchase order. Directly on the shipping task tab, I don’t even have to open it, but directly from the shipping task tab I can see that the expected receive date is two days ago. So both my vendor and myself subscribe to a service provider, and that will help us exchange this kind of information. So what I can do is I can click actions, functions, and get expected received date. This connects through a service in the cloud, and exchanges information that we need in order to get a new expected received date.

KIRILL TATARINOV: This is an on-premises system talking to the cloud, getting the actual data, software plus service?

NAV DEMOER JESPER: Software plus services, and we have a new expected received date, and how cool is it, it’s actually today. So what I need to do now is notify the other people in my organization that this is coming in today. And I can do that simply directly on the purchase order, click “create a new note,” and say expected today. I want to notify a person next to me, Kirill, if I was at my office you would not be next to me, I guess.

KIRILL TATARINOV: I guess not.

NAV DEMOER JESPER: And I click notify to put it directly on his role center. So I click save here, and what I’ve done basically is I’ve not wasted any time inside Microsoft Dynamics NAV, I’ve not been on the phone with the vendor, nor did I spend any time tracking you down, Kirill.

KIRILL TATARINOV: I’m right here.

NAV DEMOER JESPER: And basically, now it’s your turn.

KIRILL TATARINOV: Right. So this is my role, as a shipping manager, and I can see here that I have a notification from Jesper. I can just double click on it, and I see the information about the shipment that is about to happen. You can see there is a ribbon, it looks just like Office, with all the pertinent tasks right in front of me. And I guess my kind of business process here calls for creating warehouse receipts.

NAV DEMOER JESPER: Exactly.

KIRILL TATARINOV: This is where it’s going to go. I’m just going to click on this, it says one warehouse receipt header has been created, and basically I’m done here.

NAV DEMOER JESPER: You’re actually done.

KIRILL TATARINOV: I wish everything was that easy.

NAV DEMOER JESPER: Thank you so much.

So let’s fast forward to when the shipment actually arrives.

NAV DEMOER MICHAEL: That’s me. I’m the warehouse person. And I really don’t have one of those fancy PCs, I have a much more task-relevant device for me, a mobile device here. It will actually give me some expected arrivals, and I really do expect stuff here right now, it’s going to be arriving on stage. So let’s see what goodies they have for me.

On my expected arrival list I have six items. Let’s see what it is, lots of interesting boxes. I’ll just scan the first one here, straight from my list, and that will actually filter my list to only show me the relevant receipts, because that’s the only one that has this type of items. I’ll select that. It will give me that I have three types of items coming in. I’ll just re-scan this box. There we go. And it will show me the first item, it’s supposed to be five for the box 102, which is Fable 2, let’s see, one, two, three, four, five, that’s OK. I’ll scan the next type of box down here, and that will actually register my count, as well as take me to the next item. That says there’s supposed to be two, one and two, yes, that’s fine.

NAV DEMOER JESPER: You can count?

NAV DEMOER MICHAEL: Yes, I’m going to go up here, get the last one, and one, two shoot, I’m missing a box. Okay. I only have two boxes there, so I need to change the count to two, because that’s what I have. That will give me a list, it’s showing me the three lines, three of them marked as complete, because they were fully received, the last one being incomplete, because it’s simply not there.

NAV DEMOER JESPER: There’s our delivery boy.

PARTICIPANT: I lost the box in my truck, I apologize.

NAV DEMOER MICHAEL: Get out of here, I’m doing a demo.

OK. Now we are finally all set, I’m going to just re-scan this last box, and as you can see it comes up with quantity one, that was our missing box. Now I can do a full register. I’ll do a post do a post not a cancel. See what it says. The order has been posted successfully, that will bring it back to my NAV system. So life as a warehouse worker hasn’t been any easier than now. I mean, with 2009 and the mobile framework life is sweet.

So let’s see what Jesper does back at the office. (Applause.)

NAV DEMOER JESPER: Well, back at my desk I still have my purchase order open, and if I just scroll out here I can actually see that the quantity has been received, just according to plan. There has been no paper trail. Microsoft Dynamics NAV has fully supported our process. Before I go ahead and do anything else with this purchase order I just want to prepare myself for next time I use this. You saw before I went into actions and functions in order to find a function to do now. Well, what I can do is simply just customize this page, because I expect this to happen from time to time.

So I can go in and find actions, functions, and get expected received date, add that to the change group, and just make it large. I’m a visual person. So let me just add an effect box to my page, as well, that shows the item picture, so I can see what I’m actually ordering when I’m ordering. So as I click okay the screen will flicker once, and now you can see the change group has actually been updated with the function I used before, get expected received date. That will make my life much easier next time I get to this. And also on the page

KIRILL TATARINOV: The picture is right here in your role.

NAV DEMOER JESPER: The picture is right there, and as I go down here you can see the picture changes.

So what I think we have shown is that Microsoft is all about personal productivity, Microsoft Dynamics NAV 2009 is all about simple, smart, and innovative.

Well, wasn’t that a great example of how personal productivity gets improved through innovation. Another great thing here is largely the capabilities that you saw are available out of the box with the product as it ships.

On the mobile side what you saw there is a type of application that’s typically delivered by our partners on top of Dynamics Mobile Platform. It’s an example of a solution that our partners typically deliver for our customers, to address their specific needs in the mobile universe.

Now, let me switch gears and talk about the business process, talk about this very important pillar of the Dynamics business. Business process is really the backbone of any organization. Organization success is about people, about strategy, and it’s about execution. And the business process is what connects those things together. Business processes are very different, they’re different depending on the needs of different industries, and industry verticals, and micro-verticals, people who do shipping is a different thing from people who do manufacturing. It’s very important that business process address needs of those different style, and different types of organizations.

Business process also needs to cross the boundary of structured, and unstructured data, work with developers, work with professional services, work with the sales organizations who operate on a completely different paradigm, and a completely different philosophy. Business focus needs to be connected with IT, and this is really the force that creates connection between IT infrastructure and IT innovation in the business. This was the thing that the industry has been talking about for many, many years, how can we ensure that the business and IT stays tightly connected. And effectively implemented business processes can help you do it.

And last but not least, business process must be done in such a way that it enables and empowers change in organizations, not restrict change, but rather become a force that helps organizations stay ahead of the curve. A well-designed business process is effectively what makes organizations successful, and what drives businesses forward.

From Microsoft’s point of view, the very concrete promises that we have enabling our customers to implement that effective business growth. On the integration side of things, there are two very important things to know here. One is integration between different functions in an organization, making sure that Dynamics software addresses the needs of different roles in the company in a consistent fashion, making sure that people who are involved in driving sales and operations can connect through the same back office, and don’t have to deploy different systems; making sure that professional services and developers can operate on the same paradigm and share information through a common database of projects, and a common database of project accounting. The core functional integration is very important, and it’s a very strong commitment from Microsoft to help you drive it.

On the IT to business integration, there are some very important concrete commitments that we took and we’re actually executing and delivering on those commitments, making sure that business process software, business software being Dynamics, is tightly integrated with the rest of the IT infrastructure is a very important commitment from Microsoft. Today at Convergence 2008, we’re actually making very important announcements that illustrate this commitment. We’re announcing that the entire portfolio of Dynamics products will be integrated, tightly integrated, with the recently announced Windows Essentials Business Server, which is a server solution addressing the needs of medium-sized organizations with out of the box integration of the entire portfolio of security tools, management tools, and the rest of the infrastructure tools. And by giving IT professionals the ability to manage their entire IT infrastructure, and their Dynamics products, their business management software, in the same consistent user experience helps them dramatically reduce the overall cost of ownership, and helps IT people to reduce the costs, and help IT people make better connections with the business. We actually have customers who have successfully deployed the software already, and are taking full advantage of that integrated innovation on both IT and the business side.

Adaptability of the business process, making sure that the business process can react to changes on the outside of organizations, economic changes, geopolitical changes, changes in compliance, and succession regime, making sure that business processes can be adapted to changes in organizations, in the organizations coming in through mergers and acquisitions, organizations being spun off through divestitures, making sure that the business process and the software that you run to manage your business does not constrain you staying connected with the reality of your environments whether it’s outside or inside of the business.

And most importantly, making sure that the business process that you implement on top of Dynamics addresses the needs of industry verticals that you’re in, addresses the needs of specific industries, and addresses the needs of specific types of business that you perform. Tis is very important increased commitment from Microsoft, something new that we’ve started to do, and something that we’re doing very vigorously across Microsoft Business Solutions and across Dynamics.

So let me say a few more words to focus a little more about this increased focus on industry, and increased focus on industry verticals. What we’ve found is that it’s very important for us to continue to stay highly connected with our partners, and do more for our partners to expand the portfolio of Dynamics products for the needs of specific verticals and micro-verticals. It’s our partners who deliver the last mile of verticalization and micro-verticalization. We’ll continue to deliberately depend on our partners to deliver end to end vertical solutions for specific needs of specific industries. And that commitment remains invariant, and we’ll continue to work with many ISVs and value-added resellers who help us do that.

With that, we are also expanding the support for those industries, support for individual verticals from within the portfolio of Dynamics products. So it makes it easier for our partners to do this extension, so it makes it faster for them to deliver solutions for those industries. It simplifies their job and they can address the needs of our customers with ease, and respond quicker to changes in the environment. There are several industries that we support from our products today, obviously manufacturing being the highest growth segment of business applications, and manufacturing companies consuming a significant percentage of software that’s delivered in the world of business applications is a number one focus for us. Dynamics AX 2009 that will ship earlier this year, and went through very massive launch activities earlier this fall here in Europe, is the prime example of how Microsoft delivers industry platforms for manufacturing companies, delivering a wealth of functions that empower our ISVs to do more on top of Dynamics AX, and drive more capabilities for our manufacturing companies.

We’re doing the same in retail. We’re doing the same for professional services companies with significant focus on media and entertainment. And in the future we’re also increasing our focus on public sector, and the next version of Dynamics AX product will deliver significant innovations enabling organizations in public sector to take full advantage of the work that we do in our products, and the work that our partners continue to do to expand it. Let’s talk about one successful customer who has successfully implemented the industry solutions from Microsoft Dynamics by implementing Microsoft Dynamics AX. This customer, J&J Foods was actually an Excellence Award Winner from last year. And those of you who were here last year heard me talk about one thing that I committed to you to bring to this organization, and that one thing was consistency. So in the spirit of consistency I thought it was very important to talk about somebody who won the award a year ago, and to see what happened a year after, to see how they implemented the software, to see what software had done for them.

Just a brief refresher on J&J Foods. They have over 20,000 customers over in the UK, they drive over 700,000 deliveries every year, and they sell over 20 million items; a pretty significant business. They obviously care about cutting costs and, in good times or bad, and it’s very important at times like this. They needed to be able to grow their business without growing costs. The old system that they had, a homegrown system, wasn’t really copping with those requirements. And they went through an approach of selection back a year ago right ahead of Convergence, selection of the system that would help them grow. They ended up with two finalists, SAP and Dynamics AX, and they ended up choosing Dynamics AX. They chose it because it was easier to understand, it was faster to deploy, it was faster for them to adapt the system to the needs of their business process, not the other way around, and they went on and deployed Dynamics AX basically across their entire cycle, form ordering to routing to loading to delivering. The product basically runs their business.

So a year later, what do we have here? They grew their business by 31 million pounds (sterling), which is quite significant growth for a company like that. And they did it without having to increase cost. Basically, their operations, and their back-office system, was able to sustain the growth of $31 million without having to add a pound to their cost, which is very significant for a company like that. Their order accuracy improved 30 percent, which obviously results in better customer satisfaction, customers didn’t have to wait for orders, and orders were much more accurate.

Based on the analysis that they conducted through the selection process, they clearly saw that Dynamics AX would give them better TCO and faster return on investment. What we see a year later, they’ve achieved the return on their investment under one year, which is quite phenomenal.

And through those investments and through further buttoning down their business process on Dynamics AX they were able to increase their net margin by 200 percent. Those are quite phenomenal results. It’s great to see a company who made investments in technology, who saw the need in buttoning down business processes, and making their people more productive across the portfolio, achieving those great results.

They continued to stay on the curve of technology innovation. In October 2008 they upgraded to the latest version of Dynamics AX – Dynamics AX 2009. Technology continues to play a very big role in their future success, and technology and innovation continues to play a very big role in the success of many of our customers.

So, thank you, J&J Foods. I’m very excited you’re staying with us, and we see these great results from your investment.

Obviously we continue to innovate. Obviously we continue to look at new scenarios, and we continue to see how we can do even more for very concrete, specific scenarios and customers in different markets.

So, what I would like to do now is show you some very innovative technology and very innovative scenarios that we work on in our research organization to see how we can transform the warehouse management and how we can create warehouse management systems for the future.

So, I’d like to invite Lachlan here on stage to show you what it looks like today, and what hopefully one day it will look like in reality. Lachlan, please. (Applause.)

LACHLAN CASH: Hi, Kirill.

So, Kirill, you talked about J&J Foods. Distribution companies like that have very automated business processes, and that’s really the key to efficiency. However, humans really drive the process, and humans are much more able to cope with exceptions in the process. Take, for example, exceptions, water leakage damages stock in a warehouse, a forklift drives into racking, for example, and damages our product.

Now, humans are much more able to bridge the gap between the structured and unstructured data. In Microsoft Dynamics we introduce role-tailored user interfaces, and what we’re doing is experimenting on new ways of bringing the person into the business applications.

So, let’s have a look at an example of how we could do that.

So, Kirill, this is the Surface device. So, this is Microsoft Surface. It’s a multi-touch, multiuser device. So, you can see here that we have an application running, which is essentially some order; both of us can touch it.

So, let’s have a look at a small example of how this works. I can have a look at the applications running on the device. I can, for example, do some painting, for example. And so what we have here is a device that I can interact with, and both of us can interact with it at the same time. So, it’s a multiuser device. I can use touch to manipulate what I’m looking at.

Now, this is a business conference, and so why don’t we apply this innovative technology to a business application.

So, let me have a look here. I can, of course, waste some time on puzzles, but, of course, I can also go into, for example, my warehouse command center. Now, think about a warehouse for a moment. A warehouse is a dirty, dusty environment. It’s an environment where it would be much easier if I didn’t have that dirt and dust in my keyboards and mice, for example.

So, what I’m looking at here is a visualization of the warehouse. I’m looking at a top down visualization. And what I’m looking at is a heat map of the picking rates through the warehouse. So, you can see that represented by the color that I have here.

So, what I’m looking at is essentially the ability to manipulate the data that I’m looking at. So, if I’m presenting a heat map to the warehouse manager of the picking rates, they’re better able to manage and change the processes through the warehouse.

Now, this again is a multiuser application, so you can I can manipulate the application, we can look at, for example, the view of the racking in the aisles. So, I can manipulate what I’m looking at. So, I’m looking at a mirrored view of the front of the racking, for example, and this gives me the ability to, of course, look at the stock in that particular location. I can see the bar graph of how full this particular location is, and I can also see when I touch specific products where else they are in the warehouse, for example. So, I can see the visualization of that data.

Now, of course, I’m looking at the top down view of the warehouse, and so I can see my picking area, I can see my inbound dock, my picking area there, and, of course, my outbound dock.

Now let’s take an example. So, of course, I’m looking at today’s shipments here, and this is giving me the visualization of the pick for today.

So, of course, I can see represented by the color, of course, blue meaning cool where the pick rate is, orange meaning high pick rate, and so I can see at the front of the pick page this is mostly where my orange is, which is great, because that’s where we want to do the shortest distance to where I’m actually packing. There’s one right off the back here, so I can easily see that visualization.

And so you can see when I look at it, it gives me the ability to see what that product is, and I can see my pick rate for today.

So, at the beginning of the day when I’m looking at the shipments that have to go out —

So, we can see that we’re going to pick, and this means that the warehouse worker is going to have to walk all the way out the back to, of course, pick from that, right?

So, of course, what we have is the capacity, I can see I have some stock in the bulk location, and the capacity means that I’m going to have to replenish this multiple times during the day.

Now, the warehouse manager can look at this data, and then they can decide at the beginning of the day how they might want to optimize that process in terms of reissuing the pick.

Now what I can do, for example, is look at my staging area. So, it would make much more sense if I actually take that stock from my bulk location and move it to my staging area.

And so, of course, what I’ve done is represented a move, and traditionally, of course, this would be done by the warehouse workers typing in keyboards, typing in forms, but we can present a much more visual interactive interface to the business applications.

So, of course, that’s my move done. Of course, the physical move hasn’t happened. What I can do, of course, is the warehouse manager is I can see my pending move, I can see which aisle rack this actually moved from, the bin that it moved from, and where it’s going to. So, I can actually choose to release those moves, and I can choose to release the picks or reissue the picks.

Now, depending on the size of the warehouse, I might have a low-volume warehouse, I might use printed statements or I might use handheld devices, as we saw earlier, or I might use robotics in more advanced warehouses.

Now let’s take a look at another process example. For example, I can have a look at my history, and giving the visualization of the history, I’m much better able to absorb massive amounts of data, in this particular case the picking rate over time.

So, I can see at the front here that this is pretty well optimized, we’re dealing with our stock pretty well here, but what I can see is some outliers.

So, you can see down the front here I have the ability to see specific items, and if I look at the other side of the rack, I can see a product here. Now, this product is, for example, walking boots, and so this, of course, is potentially going out of season.

Now, what that means is if it’s at the front it’s using location that we’re just using up space that we’re not going to access. So, it would make more sense to actually move this. Now, you’ll see that what I can do based on the bar graph is actually move it to where I’ve got capacity. And so depending on where I might choose to move this, I can move this throughout the warehouse, of course. And, of course, I have another one here, I can see that I have, for example, some sunglasses, again probably coming out of season. I can choose to actually move that where I might need to in the warehouse.

And likewise I can do the reverse. Where there are products that are coming into season I can have a look at them in the warehouse and actually choose to sort of see, well, it might make more sense to actually move them to the front so I can optimize the process as such by manipulating the stock here.

So, of course, that’s what we can provide for the warehouse workers in a kiosk type device to better enable them to interact with the applications. And, of course, other events might happen, exceptions, for example, where, for example, maybe there was a water leakage here, and stock actually needs to be moved.

Now, so what I can do, of course, is look for empty locations. You can see the little white dock, indicating empty locations. It gives me the ability to move that and manipulate that.

So, of course, all this interaction is done, and what I’ve been recording is the history of what moves need to be made, of course, and then, of course, I can choose to, of course, update the business application and decided to, of course, release those moves.

So, I can scroll through this list here, for example, and see what ones need to be made, and choose what I need to actually make. Otherwise I can just hit the move and actually release that to the business application.

KIRILL TATARINOV: And it’s all delivered. That’s when it all goes back to the back office system, Dynamics AX, and it gets generated to the warehouse manager.

LACHLAN CASH: Exactly. Then we can choose our pick list again and the process is done.

Essentially that’s an example of how we can bring innovation, Microsoft innovation to the business applications, and bring the person into the business process and allow them to interact with the business process and allow them to adjust what they need to do in the business application.

So, people say that there are some vendors who get consumers, and most often Apple is being brought up as an example of that. And I’ll just say there are other vendors who get business, and typically SAP is brought up as an example of a company who gets businesses and who gets vendors.

And I hope this example demonstrates to you how Microsoft gets both in our research, and how we can take all the innovation that is being done for consumers, and apply it for our business customers, because frankly as we’ll go forward, we see those two worlds collapsing, and we see all the great innovation and all the great simplicity that you typically expect from consumers being increasingly used by business customers.

Now, you look at the demo and you may ask, well, use $15,000 for a Surface device, can I really afford it? Well, the good news here is Windows 7, the next version of Windows operating system that was announced at the Professional Developers Conference a couple of weeks ago, and will be on the market within the next few years, will actually bring this technology, bring this multi-touch technology to any user of Windows device. So, effectively this innovation that you just saw available today on Surface device through custom applications will be available for all Windows customers in the future.

Now let me switch gears and talk about ecosystem, ecosystem that is very important, very significant pillar of the Dynamics business.

When we talk about ecosystem, it’s important to define what we actually mean by this, and we mean the entire broad range of entity that the business must deal with. It’s customers, it’s partners, it’s the government, it’s organizations around the world, it’s organizations across many different domains, it’s different services, whether they are on the Internet or on-premise.

Organizations today can’t survive in isolation. Every company needs to be part of its own ecosystem. And connectedness of ecosystem is the key. So, when we talk about ecosystem, the word we frequently use is connected ecosystem, making sure that the dynamic business stays in close contact with their customers, partners, suppliers, consumers.

Customer connection is a very important example of connected ecosystem, and making sure that your customers, customers that use your business can address the supply and can address everything that you provide to them in the form of their relationship, and making sure that connectedness drives ecosystems is very important.

Microsoft has a very significant commitment and very significant set of promises helping you create and drive connected ecosystems.

Delivering seamless solutions, helping you manage your customers, and helping you make sure that your customers stay satisfied from your business and from your results is one of the most important significant promises in this area.

In times like this customers become even more precious assets that every business customer, every business has. And with Dynamics CRM we are helping you retain customers, drive value, and improve customer satisfaction.

Dynamics CRM 4.0 is the product that we made available last December, and this is the prime example of Microsoft’s commitment to helping you drive customer satisfaction. We continue to innovate on the product throughout its lifecycle in the last 12 months. Today at Convergence 2008, we’re announcing the result of that ongoing innovation in the form of Solution Accelerator that helps you take Dynamics CRM product and start using it in very concrete, specific scenarios that advance this out of the box capabilities of the product. And those Solution Accelerators are available as free downloads for our Dynamics CRM customers; quite a good use in today’s climate.

One of those accelerators is particularly important and particularly applicable today. It is e-services accelerator that effectively enables you to construct very rapidly self-services portals that helps your customers connect with the organization and connect with your support forces with ease, without having to engage with human being, without having to pull out the phone, disconnect the phone line, connect it through the Internet.

Communities is another very important part of the ecosystem promise, making sure that our customers and our partners have the ability to engage in community, have the ability to interact with themselves and have the ability to interact with Microsoft.

In that context today at Convergence we’re making an announcement about dramatic improvement that’s being driven into Dynamics community, a community that helps all of you stay connected, a community that helps all of you connect with Microsoft and connect with the partners and connect with each other.

The improvement that we drove in the Dynamics community now enables you to find each other, to share best practices, to understand if there is somebody there in the world who has done something with Microsoft Dynamics that you may need to yourself, and use the opportunity to learn from that example and give you opportunity to connect with each other and achieve those results better and achieve those results easier.

And connectedness of the ecosystem and making sure that the entire Microsoft promise of software plus services gives you this connected, vibrant, seamless ecosystem, and brings it all together is another very important core promise for Microsoft.

Dynamics CRM is available with a variety of deployment choices, and that’s important, a very important part of that commitment. We have many of our partners who host Dynamics CRM for our customers. We also host Dynamics CRM online in our datacenters for North American companies, soon to be available elsewhere in the world.

But most important assets here is one of example that you saw in the NAV demonstration is how on-premises deployment of business applications can connect with services in the cloud I a very seamless fashion where the boundary between on-premises deployment and services available through broad ecosystem of partners in the cloud, that boundary is completely blurred, and we truly can’t see the difference what’s on-premise, what’s in the cloud; it just gets your scenario addressed. That’s a very important core promise from Microsoft in the area of connected ecosystem.

In that context, and illustrating the example of that connected ecosystem, and somebody who’s been very successful deploying that solution, I want to highlight another Customer Excellence Award winner, and they got their award for innovation.

The key element of their success was commitment to have quality and commitment to customer satisfaction.

Vodafone Iceland previously had 18 back office systems and 14 client facing systems, and obviously in that environment it’s quite hard to be consistent, quite hard to run your business when you don’t even have common database on the back-end. Support was obviously a nightmare in the myriad systems like that.

One of the systems that they used to run and one of the systems that was really the biggest footprint in Vodafone was actually SAP. They used SAP ERP, and they attempted to use SAP CRM. And it frankly didn’t work for them, so they ran into the process of selecting alternate solutions, and they ended up choosing Dynamics CRM. For a short while, they kept ERP from SAP on the back-end, but CRM was something that they drive to manage the customer support and customer operations.

And that achieved some very outstanding results for them. And as they went on implementing CRM systems, they also decided that it’s time for them to reconsider back office ERP as well, and now they’re in the process of deploying Dynamics NAV in place of aging solutions on the ERP side.

So, as of 2007 they’ve integrated, they’ve customized, and solution is deployed in all of their customer centers, driving very concrete improvements. We’re very proud to demonstrate with Vodafone and very excited to have them as excellence award winners.

Today, they have almost 500,000 records in their central database of people and registered companies who work with them. They were able to drive 95 percent first time resolution rates, basically meaning that 95 percent of calls get resolved in the first instance, which is a very important driver for customer satisfaction.

They were able to drive increasing their sales $21 million, which represents approximately 20 percent growth, and they were able to do it by driving up customer intimacy, by improving the knowledge that their people on the front line have about their customers, being able to drive add-on sales.

And they were able to drive very significant cost savings on training. The software was familiar, they didn’t have to spend that much time on training, and getting their new people and existing people up to speed with the new software. And those efficiency savings generated very, very dramatic, concrete results, as you can see here.

To illustrate the power of choice, and to illustrate the promise and the commitment that Microsoft has in the area of connected ecosystems, I want to actually invite Ben here on stage to demonstrate for you how it all works together and how that connected ecosystem actually delivers to the concrete needs of our customers today. Ben? (Applause.)

BEN RIGA: Thanks, Kirill.

Over the next few minutes I’ll demonstrate how you can build your own connected ecosystem of customers and suppliers using an Internet facing self-service solution that integrates directly over the Internet with Dynamics CRM and is built on the Microsoft Web platform. Shall we have a look, Kirill?

KIRILL TATARINOV: Yeah, let’s take a look, Ben.

BEN RIGA: So, as you can see, we’re using an Internet portal here, an Internet Web site that was built by a Microsoft Gold Partner called ADX Studio, and they built this system using their content management system, but they also have integrated directly with document CRM.

I’ll play the role of an attendee at this fictitious conference, and I’m going to register.

When I try to register, the first thing it does is it asks me to sign in, and I’ll sign in. We’re using Live ID here. And, of course, I’ll enter my password. We’re using Live ID because that allows us to take advantage of the Live ID infrastructure without harming the privacy of that information.

You’ll notice that as I’ve logged in, it actually has pulled in my contact in foundation, and the reason for that is because I’m an existing attendee of previous conferences, it’s able to retrieve that information directly from the back office Dynamics CRM system over the cloud.

Now, of course, Dynamics CRM is very good at maintaining contact type information, but we’re also using it here to maintain transactional type information, so for instance different types of registration type information or options that you may have for the conference.

Now, when we think of connected ecosystem, you also have to think about the suppliers that are involved.

KIRILL TATARINOV: Right.

BEN RIGA: In this case the conference actually has an existing business partnership with a company called Easy GDS. This is a service available over the Internet that allows you to do travel booking. So, I’ll search for some flights here.

The value here, of course, is for the end user is that they’re actually able to book flights at the same time that they’re registering.

KIRILL TATARINOV: So, it’s a consistent experience, one service talks to another service, and the end result to customers is it’s all seamless, it’s all in front of us, it’s right here.

BEN RIGA: Exactly. It’s the connected ecosystem in action there, because you have all three of these systems in the cloud, all of them communicating directly. To the end user it’s completely seamless, it looks like one system.

KIRILL TATARINOV: That’s great.

BEN RIGA: Now, we can do the same thing for hotels and cars, but that’s a very similar experience. So, I’m going to skip ahead to the confirmation, and the confirmation here is just sort of a last step where you’re able to pull all of the information in to allow the attendee to confirm it.

Of course, we’ve saved all of that in Dynamics CRM, and so it’s pulling it directly from Dynamics CRM. And so I’m able to see all of the information. Of course, this information can then be used in e-mails to the attendee, but I can also use it. Because it’s in CRM, I can do things like manage my business, I can do analytics and so on.

It’s now dropped me off in the attendee portal. This is a portal that’s built with Microsoft Silverlight 2.0, and of course, by doing that we have this interesting and even exciting experience that allows end users to look at different types of information.

So, for instance, here I’m looking at the itinerary that I just booked, those different flights that I just booked. By making this an exciting experience, we hope that attendees will take advantage of it.

Of course, again here we’re looking at a connected ecosystem. We’re pulling different pieces of information from different services on the Internet, maps from Live Maps, weather from a weather service, social information from a social network.

KIRILL TATARINOV: Sounds like a good experience.

BEN RIGA: Exactly, and that’s something that Silverlight provides to developers so they can build that sort of service.

KIRILL TATARINOV: So, what’s happening on the back office?

BEN RIGA: I was hoping you’d ask that.

So, here obviously as I’ve mentioned, Dynamics CRM is going on in the background.

Now, in this case we’re using a partner hosted solution. We’re actually hosting with a a Microsoft partner that does that sort of thing, and that gives us the power of choice. So, we could host this on-premise, but of course we can also host it in the cloud using a partner hosting service.

One of the things you’ll notice here is that this doesn’t actually include the typical sales, service, and marketing type solutions that you see with CRM. Of course, CRM is very good at that, but in this case we’ve customized it highly to do what we need for our own business. So, we’re using the Dynamics CRM platform rather than the Dynamics CRM application. And, of course, you can see here how I’m using that platform to drive the Internet facing customer self-service portal.

Here we can see the different pieces of information, the starting date and the completion date, and the nearest airport. This is what we actually used when we were doing that flight booking.

The other thing you may notice here is that there’s 20,000 expected attendees to this conference.

KIRILL TATARINOV: Big conference.

BEN RIGA: A big conference, yeah.

And, of course, that Internet facing portal has to be able to handle that kind of volume.

We have kind of peace of mind there, because one of the things I didn’t mention – let me switch over here – one of the things I didn’t mention is that that Internet facing portal was actually being hosted in a new service that we announced called Windows Azure.

KIRILL TATARINOV: This is a technology preview of Azure services that we announced at the PDC.

BEN RIGA: Exactly, just a few weeks ago.

And so we’re actually hosting that Web site.

So, Windows Azure allows you to host, it allows you to scale your application, and it also allows you to manage your application using the Microsoft datacenter.

Of course, the application we’ve built can be deployed in either on-premise, in a partner hosted facility, or in Windows Azure. What Windows Azure allows you to do is to scale very quickly, very easily.

KIRILL TATARINOV: So, here you can just increase the number of servers deployed.

BEN RIGA: Exactly. You can see that we only have one server here. Of course, one server is great when you’re testing, but when you’re ready to deploy – in my case I may do a marketing campaign and start seeing much more volume – we need to scale that up. And I could very quickly configure that to go up to 20 servers or 30 servers or even 100 servers.

KIRILL TATARINOV: That’s great.

BEN RIGA: Now, of course, the benefit there is that I don’t have to go out and purchase that equipment, I don’t have to make that capital expenditure. Microsoft has invested billions of dollars in datacenters all around the world, and as a result, I can take advantage of that when I need it, when my conference is coming up. When my conference is scaling back, after the conference I can scale that back.

KIRILL TATARINOV: Scale it back down.

BEN RIGA: I don’t have to worry about that expenditure.

KIRILL TATARINOV: That’s fantastic.

BEN RIGA: So, over the past few minutes I’ve shown you how you can take advantage, you can build your own connected ecosystem of customers and suppliers using in this case our Windows Azure site that connects directly with Dynamics CRM and uses the Microsoft Web platform. Thank you.

KIRILL TATARINOV: Thank you very much, Ben; great demonstration. (Applause.)

Well, it’s a great example of how you can leverage the power of choice, instance of Dynamics CRM hosted by Microsoft partner and giving our customers who would use that system full advantage of depth of functionality in CRM system on customer management, but also full advantage of reduced total cost. Also great advantage of integrated innovation where Windows Azure that was announced only three weeks ago is now coming into play and being increasingly used across Microsoft, and truly becoming platform of choice for software plus services delivered by Microsoft and Microsoft partners.

So, we talked about the dynamic business, we talked about the core characteristics of the dynamic business being productive people, adaptable business process, and connected ecosystem. And we talked about some very concrete promises and very concrete commitment that Microsoft has for you to help you turn your business into a dynamic business.

And those commitments remain invariant. We’ve done pretty phenomenal amount of progress, as we hear from many of you and from the industry analysts, on the user experience, and the role-tailored interfaces, and as you saw, we continue to invest there.

We are considered the leader in user experience, and we’re investing even more, making sure that we farther help you drive productivity of your people.

We’ll continue to make business processes as supported by Dynamics to be even more flexible, even more adaptable, but most importantly even more industry vertical focused. This is one significant commitment and one significant promise that Microsoft brings to you. From either development activities or go-to-market activities, our job is to make sure that you see us as relevant in your particular industry and in your particular vertical.

And, of course, connected ecosystems and making sure that you can take full advantage of software plus service, and you can take full advantage of this new world of cloud services and bring it into your current environment, tightly integrated into that environment, is very important core promises that we have for you, core promises that will help you turn your business into the dynamic business.

And with that, I wanted to share one instant story with you. It’s a story of a company called Picanol. And Picanol is another Excellence award winner, recognized here at Convergence 2008.

I had a chance to sit down with Picanol yesterday, and I must tell you what an exciting story that is. They’ve been in the business of producing innovative weaving machines for over 70 years now. They’ve been continuously innovating and they truly put high tech in what historically had been a low-tech business. They continue to invest over 5 percent of their top line into R&D so they stay ahead of the curve. They continue to embrace new business models and implement new technologies. They’re now in the business of electronics, and through that they now provide cards that reduce emissions and drive the sustainability initiatives.

They’re the company that fully embraced the concepts of the dynamic business. They’re the company that can now do fully made their people productive. They’re the company who implemented predictable business process and consistent and adaptable business process, and they’re the company who is truly connected with the ecosystem.

So, I’m going to show a video for you, as I would like to show you, to illustrate this great example. Let’s roll it.

(Video segment.)

KIRILL TATARINOV: What a great example of the dynamic business. (Applause.)

Before we move to discussion, I want to talk about something that is very important, and very important for me to tell you, and very important for us to state time and time again, and that is our commitment to your success, and this is our commitment to consistency and continuity that we will continue to provide to our customers and partners.

A year ago at this conference here in Copenhagen, for the first time we rolled out a broad set of initiatives that we call Business Ready Customer Care, a set of initiatives that aimed at giving you peace of mind about business applications of your choice, a set of initiatives that indicate that all of the products in the Dynamics portfolio will continue to be innovated on, that all of the products will be supported for as long as you want to use them, that all of these products will continue to be relevant, that all of these products will continue to go ahead in the innovation curve, and all of those products will continue to deliver to your results.

And it’s very important for us here a year later to restate this commitment to you again, and it’s very important for us to acknowledge that everything that we promised you a year ago we have delivered. We’re shipping Dynamics AX 2009, we’re shipping Dynamics NAV 2009 on schedule. We’re continuing to innovate on Dynamics CRM by shipping accelerators, making sure that you have the entire breadth of portfolio of Dynamics products delivering to your needs, making sure that we’re helping you to turn your business into the dynamic business, but making your people more productive with every step of our innovation, making sure that your business processes can be adopted and adjusted to the needs of the changing economy, the changing environment, and making sure that you’re able to connect with the broad ecosystem of customers and partners that you work with on every day.

That is very important for us to make sure that you walk away from this conference recognizing that the commitment from Microsoft, commitment for your success is unwavering. This is something that we’re very focused on, this is why we’re here, this is why we’re so excited that you joined us for this conference, and I truly look forward to connecting with many of you in the next couple of days.

Now I would like to turn to discussion, and I guess Chris is joining me here with some questions.

CHRIS ROWE: Thank you very much, Kirill. Yes, we’ve got a little bit of time for questions. Take a seat, please.

KIRILL TATARINOV: Thank you.

CHRIS ROWE: I’ll come to questions from people in the audience, people attending Convergence a bit later. I just want to just a couple of notes I made based on what you’ve been saying just now. You talked about the dynamic business, your vision for how businesses can endure and survive and grow. But, of course, your business, Microsoft Business Solutions, is a little bit like a midsized business inside Microsoft. So, what are you doing as a business to emulate that vision of the dynamic business?

KIRILL TATARINOV: Well, you’re absolutely right, Microsoft Business Solutions is exactly like the businesses that we’re trying to serve with our solutions. And obviously everything we’re talking about here is very much applicable to the way we run our business. Making sure that our people remain productive and making sure that our people have the best tools is a very important part of the things that we’re doing.

We’ve just implemented Dynamics AX for our own order processing systems to help us make people who take orders inside Microsoft Business Solutions for many of our partners much easier, and that process was done quite successfully.

We implemented Dynamics CRM, so it’s actually moving the entire Microsoft sales force off Siebel to Dynamics CRM in the course of the next year and a half, and we’ve already moved a number of dynamic sales forces all over the world to Dynamics CRM, so people who interact with you and people who interact with our partners now have much better back office support through those technologies.

Of course, we continue to look at our business processes, processes that help us deliver the best technology and the best solutions for our customers, and our ecosystem with communities that we support and the amount of energy that we put into Customer Source and Partner Source, prime tools for driving the community forward, is a very important part of what we do here.

CHRIS ROWE: So, what sort of things do you feel, do you host, that the people out here, you know, the customers, that they can do to emulate that same dynamic business?

KIRILL TATARINOV: Well, there are a number of things that people can do, and I hope everything that we talk about is something that you can take away from this conference and take it forward.

Throughout my talk I mentioned a number of Excellence Award winners, and we’re very excited to have those Excellence Award winners here at the conference. They are true examples of companies who either achieved this aspirational state of being the dynamic business or firmly on the way of getting there. And this conference is a great opportunity for all of you to connect and to learn from each other and to hear those specific examples from those winners.

CHRIS ROWE: Okay. Well, I will move on. Those are my questions.

KIRILL TATARINOV: Good questions, by the way.

CHRIS ROWE: Thank you very much. Well, I’m listening to you out the back, you see.

OK, I’ve got a couple — some questions here. As an AX customer I don’t want to upgrade to new versions, but I do sometimes need to port. This is not an Office pack, this is an ERP system that’s deeply ingrained in our organization and also tightly integrated with our people. Upgrading is very painful, and creates attitudes in our business. What can Microsoft do in this area? Is there longer-term mainstream support?

Is there longer term mainstream support?

KIRILL TATARINOV: There is longer-term support, and there is support as part of Business Ready Customer Care that allows our customers to effectively run their systems, the system of their choice, whether it’s a new version or old, for as long as they want to. They can run it for five years in mainstream support, five years in a standard, and then they move into custom. So, that is covered.

But it’s very important for us to note that our investment in innovation isn’t just future new technology; our investment in innovation also covers the actual upgrade process to make sure that it’s not as painful as it historically has been to move to the new version.

Because we obviously want our customers to take full advantage of our innovations. In many cases this is something that you already own through the enhancement plan that you have from us, and we want to make sure that you take full advantage from that technology and from that innovation and from our investments, and that’s what we do.

CHRIS ROWE: OK. I hope that’s a full enough answer for you.

The second question, we’re running out of time, but Juergen from Germany says, Hi, Mr. Tatarinov – oh, respectful there (laughter) – I’m an ERP customer running NAV in Germany. I’m currently considering CRM, but the cost of the investment for my business is currently too much. We don’t want to invest too much capital, and we want to free up our cash flow. Is Microsoft considering anything to help my situation?

KIRILL TATARINOV: Well, first of all —

CHRIS ROWE: What do you think?

KIRILL TATARINOV: Yeah, there are a few things we can talk about, and first of all, thank you for considering CRM. Hopefully the discussion here today and in the next day and a half will give you enough proof of how CRM systems can help you drive your business and help you accelerate and prevail in this economy.

From the concrete help that we can provide, approximately a year ago, a little more than a year ago, we introduced a solution that we call Total Solution Financing that effectively helps our customers in a number of geographies to get the financing from Microsoft that helps them finance the purchase of Dynamics. And obviously in times like today, this becomes even more critical and even more important.

Now, since the question comes from Germany, there is something more that we have for our customers in Germany and 11 additional countries. Last week, we introduced zero percent financing for customers in 12 countries, basically meaning that they can get zero percent financing for the period of 36 months between now and March, and they can finance the purchase of licensing and the purchase of first year maintenance of Dynamics products, all Dynamics products for that period from Microsoft.

CHRIS ROWE: OK, well, that’s great news for Juergen, obviously, but what about for countries where financing isn’t available at the moment?

KIRILL TATARINOV: Well, the variety of ways we’re looking to help our customers outside of those 12 places where we have Total Solution Financing deployed right now, and as we move forward, the list of countries will be expanded, and as we go forward there are other mechanisms that we will deploy. We will help.

CHRIS ROWE: We will help. Excellent.

Well we’re very nearly out of time, so my apologies to people who sent in questions, and I haven’t managed to get answers for, but I understand there will be a response through e-mail, is that right, for all the questions?

KIRILL TATARINOV: Yeah, so all the questions will be answered by e-mail by Chris.

CHRIS ROWE: No, not by me. (Laughter.) Yeah, I don’t know will be the answer. Ich habe keine Ahnung.

Any closing thoughts?

KIRILL TATARINOV: Well, the one thing that I want to close with is to say a big thank you for coming here, a big thank you for showing this commitment to all of you, to your partners and to us by coming here and spending time in difficult times like today, by giving us the opportunity to connect with you, by giving us the opportunity to demonstrate to you how we can continue to work together, demonstrate our commitment, demonstrate the work that we’re doing to help your businesses become the dynamic businesses, and help you walk away with sufficient ammunition to prove to your shareholders that you made the right decision by choosing Dynamics, and help those of you who are looking to choose Dynamics the right confidence to go ahead and select the solution for your future needs.

So, please take these next two days to your advantage. Connect with your peers, network, go to the sessions, go to the demonstrations, look at everything that we do, and look at the concrete proof of our commitment to you.